Apple Watch Dominates Swiss Watch Industry

Apple Watch dominates the world

The Smart Watch Crisis continues apace, as the Apple Watch dominates the entire Swiss watch industry. In terms of units sold, the gap between Chinese-made Apple Watches and Swiss-made Swiss watches (some with Chinese parts) is becoming a chasm. The Swatch Group may not be on death watch, but the writing’s on the wall. And the ‘net. According to industry analyst Steven Waltzer . . .

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“Apple Watch shipped [an estimated] 30.7 million units worldwide in 2019, growing a healthy 36 percent from 22.5 million in 2018. A blend of attractive design, user-friendly tech and sticky apps makes the Apple Watch wildly popular in North America, Western Europe and Asia.”

Neil Mawston, Executive Director at Strategy Analytics, added, “We estimate the entire Swiss watch industry together shipped 21.1 million units worldwide in 2019, falling 13 percent from 24.2 million in 2018. Analog wristwatches remain popular among older consumers, but younger buyers are tipping toward smartwatches and computerized wristwear.”

Older consumers have this nasty habit of dying off, leaving less than rosy prospects for the Swiss watch industry. Not to put too fine a point on it, the Apple Watch dominates both the present and the future.

SWATCH Big Bold Jellyfish

Mr. Waltzer reckons there’s a reckoning coming, but claims all is not lost – yet. “The window for Swiss watch brands to make an impact in smartwatches is closing. Time may be running out for Swatch, Tissot, TAG Heuer, and others.”

Clearly. In fact, if Mr. Waltzer’s betting his kids’ college education fund on a Swiss smartwatch counter-attack, he’d do well to check out local state universities.

Apple watch dominates the Alpina Seastrong horological smartwatch - and howSwatch’s SWATCHPay! is a non-starter stuck in the Alps. Alpina’s Swissanese “horological smartwatches” offer less than six functions via a dull, kludgy phone app. Breitling’s Exospace B55 Connected – a $9k+ hybrid that can’t even guide you through a breathing exercise – never got off the ground. Enter “smartwatch” into Breitling’s search engine and . . . zero results.

OMEGA boutique Macau

At the same time, the Swiss watch industry is taking a major hit from the disappearance of the high end Chinese watch market – as the coronavirus shuts down Macau’s gambling mecca and destroys consumer confidence in the entire region. The only bright spot: Apple Watch production is in limbo – more than a million furloughed Chinese workers await the perils of close-contact in coronavirusland.

Even if the Apple Watch supply chain stays stopped, it’s only a matter of time before Cupertino’s favorite son gets production back up and running, somewhere, somehow. There’s billions of dollars at stake. Billions that used to go into the bank accounts of Swiss watchmakers, that will never flow that way that fast again.

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10 Responses to Apple Watch Dominates Swiss Watch Industry

  1. Luke Ibis says:

    A couple of thoughts, specifically as this applies to the Swatch Group…

    1. Was this massive sea of customers really the mechanical watch industry’s to lose? Or were they non-buyers that now own an Apple Watch because of the unique features it offers? I’m guessing the latter, not that it lets anyone off the hook.

    2. Swatch had a really cool opportunity to forge their own path with the Connected Heuers, but the first generation was kind of a bummer and they’ve let the whole line rot on the vine; the products were probably managed by a group drawn from the mechanical lines, they didn’t bring the right approach to the project or to their interactions with the broader organization in spite of a lot of early interest and support.

    3. There is no re-gaining the ground they’ve lost. Apple controls the SDK, access to their hardware and the App Store itself. Now that they know they have a hit on their hands they can easily block anyone out or reduce the ability of an outside watch to interact with the iPhone. They won’t cede an inch.

    • Robert Farago says:

      As for point one, the 35% drop in Swiss quartz watch exports over the last five years says they’re losing their existing customer base. As for point two, culture eats strategy for lunch. And point three is spot on: Apple owns the smart watch space. The game is theirs to lose.

      • Luke Ibis says:

        Ok, so there is definitely a cohort of customers that Swatch lost to Apple. There is also a bigger cohort that Apple designed a product specifically for.

        The Swiss either never had an opportunity with them or missed the chance to build something that got them to spend money. Either way they lost big. Culture kills strategy, especially when the strategy is to not have a strategy.

  2. sightline says:

    There was never going to be, and there will never be, any sort of Swiss smartwatch industry. For the reasons mentioned by Luke above, but mainly because Swiss watchmakers lack the skills to build smartwatches. Specifically, they lack any sort of leadership in:
    1. Chemistry
    2. Packaging
    3. Software

    Smartwatches really push the technological boundaries because they have to be extraordinarily intricate for their package size . They need more power from their batteries (chemistry), incredibly dense packaging to get all the electronics and batteries in an attractive form factor, and the software to put it all together.

    The Swiss watch industry (and frankly anybody but a very few integrated hardware designers like Apple and Samsung) aren’t even close to being good enough on one of these axes, let alone all three. The reason that almost no traditional computer manufacturer had a hope in hell of producing a smartphone is the same as why no traditional watch manufacturer has one to product a competitive smartwatch – they simply lack any of the competencies needed.

    • Luke Ibis says:

      Excellent points! It’s easy to forget all the technology packed into those watches, especially in the batteries. I think they had a chance at one point to either acquire or partner with companies that have the skills, but that ship has sailed.

      That said, I don’t see Samsung setting the world on fire with their product. Do you think there’s a chance that, for the right money, we could see a Swiss-Korean partnership to take on Apple? At a minimum it’s a fun thought experiment. There’s juice there for Samsung because their brand doesn’t have the cachet that Apple has, nor the design sensibility and style.

      • Mark D. Stroyer says:

        Most of the smartwatch roost is being ruled by Apple. Everybody I know who has an Apple Watch has it because of Apple, because of their iPhone (generally the oversized and unwieldy sort but I won’t dive into that deeper) and they would not “wear a watch”. And it’s there so they can read their texts without pulling out their eight inches of screen to look at it.

        So I think the crossover is more coincidental than anything. As for the Swiss quartz…well we all know that’s ultimately a finger that was plugged in a dyke forty years ago, right?

        • Robert Farago says:

          The theory: A great many Apple Watch buyers are buying a watch. Before the Apple Watch they used their phone and left their wrists bare. The Apple Watch paves the way for “regular” watch sales.

          As someone who wears an Apple Watch – and trad pieces – I can tell you Apple’s device is HIGHLY addictive. It’s hard to imagine anyone used to it switching to a traditional watch for anything other than ceremonial occasions. That’s a MUCH smaller market than the one that went before it. OK Boomer?

          • sightline says:

            The Apple Watch is not a watch. It is a notification band that happens to tell time. In all honesty the lower end Swiss watch industry is collateral damage, unlike with quartz watches.

            It’s no different than the collateral damage that happened to the camera industry. There will be a high end and not much else. Although with watches the cheapest quartz price point will always be much lower than the cheapest smartwatch point so there might be a low end.

      • sightline says:

        It’s certainly possible – I’m positive that the major companies have had discussion like that – but I wouldn’t bet on getting anything good out of it, were it to happen. The history of luxury brand / tech crossovers is…not encouraging.

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